November 3, 2011 / 11:17 AM / 8 years ago

Sarkozy may make headway at G20 on transaction tax push

CANNES, France (Reuters) - European leaders could make progress in their drive for a financial transaction tax at a Group of 20 summit this week after French President Nicolas Sarkozy indicated Washington may prove less of a barrier than in the past.

An EU source told Reuters the United States now seemed “less problematic than the UK” in resisting a push led by Sarkozy to create a tax that is at least pan-European to fund development projects in poor nations.

A source in an international development organization told Reuters the United States still opposed the idea in principle but would not block others from going ahead with new taxes.

Sarkozy told development groups in a meeting on Wednesday he was hesitant about moving forward alone on the idea. Britain, which has Europe’s biggest financial center, has warned that a unilateral European tax would drive banks out of Europe.

“I think we have a common analysis on how to get the world of finance to contribute to resolving today’s crisis,” Sarkozy told reporters following a meeting with U.S. President Barack Obama at the start of the two-day G20 meeting in Cannes.

The Group of 20 major economies has so far hit resistance to the idea of a global transaction tax based on the so-called Tobin Tax idea devised by a U.S. economist in the 1970s.

The European Commission proposed an EU-wide transaction tax in September, but banks are strongly against it, as is Britain.

A British government source said London’s position remained that any transaction tax would have to be global, not at a European level only.

Germany was initially in favor of the tax idea but has turned lukewarm and is contemplating what the proceeds of such a tax should be used for.

Outside Europe, China, Canada, Japan and Australia also oppose the idea.

Reporting by Lesley Wroughton and Luke Baker; Writing by Catherine Bremer; Editing by Paul Taylor

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